Bankrupt crypto lender Celsius has been granted permission to start liquidating its altcoins and convert them into Bitcoin (BTC) and Ether (ETH) starting July 1, 2023. This decision follows discussions with the Securities and Exchange Commission (SEC) and aims to ensure compliance with federal and state regulations.
Key Takeaways
- Celsius can convert altcoins to BTC and ETH starting July 1, 2023.
- The decision follows discussions with the SEC.
- The move aims to comply with federal and state regulations.
- Celsius collapsed in July 2022 and is preparing an updated bankruptcy plan.
- The SEC has recently taken action against major crypto exchanges.
Background
Celsius, a crypto lending platform that collapsed in July 2022, has been navigating the complexities of bankruptcy proceedings. The company’s sale to the crypto consortium Fahrenheit was approved in May 2023. As part of its bankruptcy plan, Celsius proposed liquidating its altcoins to distribute assets to creditors in the form of BTC and ETH.
Court Approval
On Friday, Bankruptcy Judge Martin Glenn of the Southern District of New York approved Celsius’s proposal. The ruling allows Celsius to sell or convert any non-BTC and non-ETH cryptocurrency assets starting July 1, 2023. This decision came after extensive discussions with the SEC, which has been scrutinizing the handling of less-used crypto tokens that may constitute securities.
Regulatory Compliance
Celsius has been in regular dialogue with the SEC and state regulatory agencies to ensure that the proposed distribution of cryptocurrency complies with all applicable laws and regulations. The company aims to avoid distributing any cryptocurrencies to creditors other than BTC or ETH, barring limited exceptions.
SEC Actions
The SEC has recently intensified its scrutiny of the crypto industry, taking action against major exchanges like Coinbase, Binance, and Bittrex. The regulatory body has argued that tokens linked to projects such as Polygon (MATIC), Near (NEAR), and Cardano (ADA) fall under securities regulation. This increased regulatory pressure has influenced Celsius’s decision to convert its altcoins to BTC and ETH.
Future Plans
Celsius is preparing an updated bankruptcy plan that will focus on distributing assets in BTC and ETH. The company’s efforts to comply with regulatory requirements aim to expedite the distribution process and provide clarity to its creditors. The SEC’s recent actions have also impacted other bankrupt crypto firms, such as Voyager, whose plans were delayed due to regulatory concerns.
Conclusion
The approval for Celsius to convert its altcoins to BTC and ETH marks a significant step in its bankruptcy proceedings. By aligning with SEC regulations, Celsius aims to ensure a smoother distribution process for its creditors. The move reflects the broader regulatory landscape, where the SEC is increasingly asserting its authority over the crypto industry.